Letter to editor

The strengthen strategies during post Covid 19 after the virus crisis
hit hotel industry in Malaysia
Nur Syahira Shari, Mohd Faizun Mohamad Yazid, Mohd Farid Shamsudin
MBA, Universiti Kuala Lumpur, Business School
syahira.shari@s.unikl.edu.my
mfaizun@unikl.edu.my
mfarid@unikl.edu.my

Introduction
The Covid-19 pandemic is a crisis that affects all over the world, including Malaysia. This shows a significant impact
on the hotel industries and other industries related, such as tourism and the aviation sectors, which have been felt
immediately since the outbreak of Covid-19 due to travel restrictions, cancelation of events, and the reluctance of
individuals to travel. In this most challenging phase, the government provides some help to all industries as they
provide subsidies under the stimulus package for the company to pay their employee wages instead of deciding to lay
off. However, this is not sufficient. Hotel industries are still struggling to survive now and for the future. There is also
a need for some strategies to implement and help from both the public and private sectors to help them grow back and
stand as they were before.
Malaysia is facing the worst economic slowdown in its history, even as many developed nations suffer extreme
downturns due to the Covid-19 pandemic and the MCO. They were targeted in 2020 to be a big year for the hotel and
tourism industry in Malaysia. Hotels industries expected millions of travelers. The tourism and hotel industry this year
should have boomed like never before. The promotional push for the big "Visit Malaysia 2020" campaign was set in
motion worldwide. The Southeast Asian country anticipated about 30 million visitors and a strong €20bn ($21.5bn)
revenue.

As we know, the tourism market, which can be affected by hotel industries in Malaysia, has been a significant source
of foreign exchange revenue and contributes to 9.3 percent of our country's GDP. Reasonable travel and tourism
policies allow for 10 million international visitors per year. Malaysia, Indonesia’s tourism sector not only calculated
for roughly 4 percent of the overall economy and plans to double the figure by 2020 by improving infrastructure,
accessibility, health & hygiene, as well as enhancing online marketing promotional strategy, leading to opportunities

1
in the coming markets. Besides, in 2015, the government revised its visa-free access policy to attract more foreign
tourists. In recent years, famous tourist destinations such as Bali and Jakarta have already seen a massive influx of
investment, particularly in the upper end of the market, leading to excessive supply, promoting the establishment of
hotel and tourism industries.
However, Malaysia and around the world have been struck by the virus or COVID-19 pandemic, which has put a
damper on all of this, affecting, in particular, the more than 3.5 million people employed in the hotel industries. What
came was a virus, which caused the economic drop. Besides, with it, Malaysia's hotel and tourism industry have
experienced the worst crisis ever. Conventionally, an infection was used to attack vulnerable groups in their lifestyle
with food and health care insecurity, and they were usually the poor in society. Besides, Corona infection attacked
international travelers for the first time, and the pandemic was caused by travel and thus confronted the affluent social
class worldwide.
On March 18, 2020, the government of Malaysia bans individuals from traveling to other states that have been deemed
affected by a coronavirus. On March 25, as the rate of new cases per day remained consistently high, the MCO was
extended by an additional two weeks, until April 14. The MCO was announced on April 10 to be extended until April
28, and was extended again on April 23 to May 12. A gradual lightening of restrictions under a "Conditional Movement
Control Order" (CMCO) was announced on May 1 and is in effect until June 9, allowing most businesses to open on
May 4 under strict practice standards. Outsiders have accounted for most of the country's new cases since May.
On June 7, the Prime Minister of Malaysia announced that the current conditional movement control order (MCO)
would be replaced with a more relaxed version described as an MCO recovery from June 10 on. Many activities and
businesses are allowed to open, such as hair salons, barbershop, and the most critical domestic tourism activities. They
will now be allowed to resume operations under the RMCO, as the government has permitted interstate travel. This
news is the good news for the hotel and tourism industry that is struggling to survive now and for the future before
this in several phases.
Current situation of covid-19 in Malaysia
(June 7, 2020 - 5.30 pm)
New positive cases 19
Total positive cases 8,322
In treatment 1,531
Recovered 39
Total recovered 6,674
Total death 117
Sources from Kementerian Kesihatan Malaysia

Impact and problem facing by the hotel industry

This deadly virus is more severe than estimated by specialists and the newest pandemic in recent history, with more
than 1.9 million infections and more than 120,000 deaths as of April 14, 2020. Initially reporting the highest number
of cases in Southeast Asia in March and early-April, the country's case count has since been eclipsed by the Philippines
on April 14, Indonesia on April 15 and Singapore on April 18, while the extent of its outbreak remains more severe
than in neighboring Thailand and Brunei, with a higher fatality count than in Singapore, Thailand, and Brunei. In
Malaysia, our medical response to the outbreak led by Health Director Noor Hisham Abdullah, and two successive
governments under the Ministry of Health. Preparations for stockpiling supplies, detecting and tracking cases and
treating COVID-19 patients were stated to have been initiated as early as January 6, 2020, following a study by the
World Health Organization (WHO) on an outbreak of "pneumonia of unknown origin" in Wuhan City, Hubei, late
December 2019. As jumps in cases began to occur in early March and the Yang di-Pertuan Agong expressed the Prime
Minister of Malaysia later announced great concern over the escalation of the outbreak and measures to combat the
outbreak via live nationwide telecast on March 13, 2020, and by March 16, a national "Movement Control Order"
(MCO), intended to mitigate the spread of COVID-19 through social distancing, was announced to last between 18
and 31 March.

2
 Hotel room cancellation and losses due to travel fears and restriction
From Jan -March 2020
Losses due to cancellations Room cancellations
(RM)
Kedah 3,291,500 3,239
Perak 1,354,206 3,646
Pulau Pinang 8,962,185 18,476
Kuala Lumpur 24,912,199 61,859
Selangor 9,053,751 25,940
Pahang 215,756 259
Melaka 708,499 4,128
Negeri Sembilan 7,655,685 20,665
Johor 7,711,922 20,977
Sabah 11,788,551 33,769
Sarawak 37,775 99
Terengganu 446,406 466
Total 7,5692,028 193,057
Sources from Malaysian Association of Hotels (2020)
Started from the period, all businesses included hotels, airlines, tourism had been stopped, and the Prime Minister of
Malaysia stated that foreign visitors are prohibited from entering Malaysia, and that travel is not permitted. This news
gave the hotel industries a significant impact. As we know, tourism has become the third-largest foreign exchange
earner in Malaysia, representing 7% of the Malaysian economy in 2005. As of 2011, Malaysia ranked among the top
nine in the world's most visited country, behind Germany. Consequently, the impact of many hotels in Kuala Lumpur
on the local hospitality industry is facing partial closure as their occupancy rates have fallen to a massive low. Several
four and five-star hotels in Kuala Lumpur said their occupancy is currently below 10 percent, and their business is
partially closed. However, temporarily until the situation improves to remain viable.
When the number of infected cases increased, the country was put under the Movement Control Order (MCO) until
April 14, 2020. Many other company operations have practically slowed down or come to a complete halt except
'critical services.' The tourism industry is a networked industry with many other economic sectors, including hotels,
community activities, education, finance, agriculture, medical, travel and transport, construction, real estate, retail,
and vice versa. Four thousand eight hundred eighty hotels, including budget hotels, in the country, are registered with
the Tourism, Arts, and Culture Ministry. It was reported that the Malaysian Association of Hotels (MAH) projected a
revenue loss of RM560.72 million for just the MCO period, with occupancy rates expected to fall to a staggering 11
percent. MAH President Kamaruddin Baharin said that because of the pandemic, and the hoteliers have predicted a
much lower occupancy rate for the coming months.
However, some city hotels still thrive because they have long-term guests staying coupled with short-term guests who
have prolonged their stay due to the MCO. To break even, the hotel should have an average occupancy of 40% with
additional sales from its food and drink outlets, events, and retail outlets. However, overall deals for some hotels are
down more than 90 percent, with a rise in customer cancellations for both lodging and activities. The hotels are running
at a considerable loss and, depending on the outcome of the Covid-19 situation, and this could continue for the next
six to eight months or longer. How quickly the hoteliers will recover from Covid-19 will depend on the effectiveness
of containment measures.
According to Tourism Economics, global travel in Malaysia is forecast to decline by 10% to 18%, which is the most
significant year-on-year decrease in the Covid-19 outbreak. However, the hotelier expects the Covid-19 impact to be
long-term, and he thinks the RM250 billion 'Caring Economic Stimulus Plan' will do very little to soften the potential
effects. Hoteliers must face another challenge even though Covid-19 no longer exists, and when the market improves,
which is the average daily cost of rooms. In new reservations, most hotels should experience a slowdown. What can
be expected is a price war in which hotels drop their room rates to increase occupancy. By doing this, they will drag
the hotel business down further. When the economy recovers, hoteliers have to change prices sensibly and not undercut
one another. Everyone knows that the hotel industry faces a lower return financial pressure, but he or she has no choice
because of Covid-19 to partially close their business. Room occupancy has dropped from 60 to 70 percent to below
20 percent, and the result of poor room sales is that they have to lay off employees.
As we know, government supports wage subsidies under the stimulus package. Still, it does not help much as the RM
600 monthly wage subsidy for three months, for workers earning less than RM4,000 monthly, falls below industry

3
expectations. For six months, the hotel industry had previously suggested a minimum of RM1, 000 per employee, or
a minimum equivalent of 50 percent of the employee's monthly salary. This is in answer to a forecast much lower
occupancy rate for the coming months, looking at the world's situation.
According to Kamaruddin Baharin, president of the Malaysian Association of Hotels (MAH), 2,041 employees in the
hotel industry have been laid off due to economic pressure and the extended MCO. In contrast, 9,773 have been
granted unpaid leave, and another 5,054 have taken pay cuts. The Malaysian Association of Tour and Travel Agents
(MATTA) expressed disappointment in the stimulus package in a separate statement. The local tourism sector, which
employs 3.5 million people and contributes 15.2 percent to the nation’s Gross Domestic Product, has seen revenues
fall by 90 percent in March. According to the MATTA press release, the sector is looking at a near-total revenue loss
for April, May and June. But all the government's restrictions are making, especially indefinite curfew across the
country, travel restrictions, aggressive social distancing measures are some of the critical criteria that the government
has currently imposed to slow the spread of the covid-19 outbreak.
Although hotel services are part of the essential services that are allowed to operate during the Movement Control
Order (MCO), hotels are prohibited from accepting new guests. They can only assist those who had already checked-
in into the hotel before March 18. Food and drinking services should be limited to room service only, and all other
hotel facilities and services should remain closed. Now that the MCO deadline is extended until May 12, several hotels
will be pressured to agree on the outcome in the next few weeks.
With many hotels shutting down or downsizing, this will harm the country's economy, as many related industries will
suffer from business loss. Many hotels have already issued a memo to their employees saying their wages will be
reduced or they will have to take three to six months of unpaid leave. This year, Estadia Hotel and Hatten Place Melaka
issued a memo requesting employees to take unpaid leave from April 15 to June 30. This is based on a list of cost
controls that have been circulated in social media by many businesses, including aviation, education, manufacturing,
and oil & gas firms.

Closing of hotel cases impact by covid-19 pandemic

Plenitude Bhd joined the list of businesses that shut down their hotels due to the Covid-19 pandemic. Last week the
Jazz Hotel in Penang announced it is closing its doors. Penaga Hotel and Jerejak Island Resort may follow suit, both
managed by VHM Hotel Management Group, based on memoranda circulating on social media. Located in Ipoh,
Kinta Riverfront Hotel and Suites are expected to close for good this month. An inter-office notice signed by the board
of directors and management representative of the hotel, Tan Kim Hee, dated April 22 and revealed that the hotel
would close on April 30. The hotel was no longer able to maintain its company, having sustained losses for months
even before Covid-19, and subsequently falling into the red after the virus outbreak due to room and event
cancellations.
The 4-star Tower Regency Hotel, another hotel in Ipoh, also announced its closure on April 30 to cut losses that have
accumulated over the past three years. In a filing with Bursa, Plenitude said it would close with immediate effect two
hotels in Penang, namely Mercure Penang Beach and the Gurney Resort Hotel and Residences, as well as Travelodge
Ipoh in Perak. Due to the virus outbreak, the developer will also downsize the operations of other hotels he owns. The
Covid-19 pandemic had affected its hospitality businesses severely. With travel restrictions at home and around the
world, the company's hotels have suffered significant decline inactivity. They have no choice but to downsize their
company and operations.

Recommendation strategies
 Flexible and immediate response in promoting
There is no question that this pandemic situation has caused Malaysia's Tourism and Hotel Industry many adverse
effects. Firstly, to be aware of potential visitors, it is necessary to spread the news through news outlets and social
media platforms. As our Prime Minister said on June 7, 2020, domestic tourism is now permitted, so advertisement
campaigns are also crucial in marketing and promoting the tourism and hospitality industries in Malaysia.
Additionally, Malaysian hotels can improve or introduce the Flexi-rate and allow guests to move a reservation to a
new date. It is another primary tactic for promoting hotel business to offset emergency cancellations. Further, making
some timely-modifications to existing hotel policies is also vital, such as flexible cancellation policies, flexible-rates
for all services, ensuring strict hygiene policies should be some of the critical areas of concern. Use 'flexibility' as one
of the key marketing messages is highly recommended because it will help attract many businesses.
Based on the current situation, people are still afraid to come to the area, so tourism, the hotel industry can encourage
and concentrate on remote accommodation centers. It can be another primary strategy to attract tourists. Examples,

4
hotels like a resort, eco-friendly hotels, and remote attractions and locations focused on nature and culture can have
great potential to promote themselves. These strategies would also help attract tourists and boost F&B sector revenues.
As the Prime Minister of Malaysia banned traveling outside our country, the hotel and tourism industry must take this
opportunity to promote rapidly growing domestic tourism.

 Price adjustment
Almost all the hotels on these circumstances should lower the prices to reduce the perishability of
the service. Therefore, it would be an excellent opportunity for perceptive tourists to visit a hotel
or consume services in a hotel with much lower prices. Nevertheless, hoteliers must monitor the
pricing trends of other hotels under different grades. Besides, hoteliers must adjust amount sensibly
when the market recovers and not undercut one another. Hence, we hope cheaper travel and
accommodation costs may motivate and drive the sector once the Covid-19 pandemic is contained,
serving as a slice of positivity in this sector.
 Provide value added or flexi-service.
At the same time, it is also recommended to promote Flexi-services or promoting value-added services. Nevertheless,
flexible-service is more relevant as the current pandemic situation people are very much concerned about their health
and safety. Thus, taking some additional time to clean the entire hotel is essential. These strategies will positively
affect ensuring hygienically clean safety and a secure environment for guest stay.
 Collaboration with public and private sector
It is recommended to initiate collaborative strategies among the public and private sectors. Besides, government should
look at altogether abolishing the tourism tax and assist the hospitality sector with more incentives. The government
should also look at reducing the service tax for F&B operators as their business has been hit badly by Covid-19.
 Implemented and joining government campaign
Concerning the World Tourism Organization's (UNWTO) special attention, the world has already launched many
activities to save the necessities of the hotel and tourism industry at present. It has been the common thread running
through the response of the World Tourism Organization to the current crisis, emphasizing tourism's fundamental
values. With the slogan used, "By staying home today, we can travel tomorrow. The hashtag #Travel Tomorrow
encapsulates this message of solidarity and hope, the World Tourism Organization (UNWTO) calls for shared
responsibility among travelers and the tourism sector around the world to deal with the COVID-19 coronavirus
pandemic‖ (UNWTO). As the hotel industry connected with tourism industries, hotel industry players need to take this
opportunity of this campaign to boost their marketing and set up to increase the sales and make the occupancy of room
increasing.

Conclusion
While the country at the stage of not to move forward with the other operations along with the hotel industry, the
country still needs a preventive and protective planning enhancement to get back to the stage that Malaysia stands
before at any industry, especially the tourism and hotel field that yields the country's income at its peak. It would take
more time to reach back to the core capacities within this industry. However, some rules need to implement and need
to follow the government SOP to ensure all tourist are safe which include placing thermo scanners in every hotel
lobby, keep social distancing, tourist need to wearing a mask and keep all our tourist data whenever they enter the
hotel.